Key Takeaways
- Experts say it’s been the most turbulent period in UK mortgages since autumn 2022, when government policies triggered extreme market volatility.
- 472 mortgage products have been withdrawn in recent days, around 6% of all available mortgages.
- Lenders are eagerly watching the Bank of England’s next move on March 19.
UK mortgage rates have surged past 5% this week as lenders adjust to changing interest rate expectations and spiking bond yields after the outbreak of war in the Middle East.
The average two-year fixed residential mortgage rate rose to 5.01% on March 11, up from 4.82% seven days earlier, according to data from Moneyfacts.
Some 472 residential mortgage products, or 6.5% of the total UK mortgage market, have been withdrawn since March 9.
Will UK Mortgage Rates Keep Rising in 2026?
Meanwhile, the average five-year fix rose from 4.94% to 5.09%, its highest level since June 2025.
“Recent days have been some of the most turbulent in the UK mortgage market since the aftermath of the September 2022 mini-budget,” says Adam French, head of consumer finance at Moneyfacts.
The fall in available mortgage products this week has been the largest since 935 were pulled on Sept. 27 2022 alone, following then-UK Prime Minister Liz Truss’s market-rattling policy announcements.
French says many of the products will likely return to market in the coming days and weeks as lenders adjust their pricing to expectations of “higher for longer” interest rates. The Bank of England meets next week and is predicted to hold rates at 3.75%. Before the war, it was lined up to cut rates by 0.25 percentage points.
“It’s unwelcome news for borrowers, as the prospect of falling mortgage rates has quickly given way to rate rises. How far they could go is now heavily dependent on how global markets and inflation expectations evolve as conflict in the Middle East unfolds.”
Why Have Mortgage Rates Risen Amid the Iran War?
Prior to the outbreak of war, mortgage rates had largely been expected to continue on a downward trend in the UK this year. Falling inflation, lower economic growth prospects, and rising unemployment have all increased the likelihood of interest rate cuts from the Bank of England.
However, surging energy prices in the wake of the conflict have changed the market’s view on the future path of interest rates, which has a significant bearing on the cost of mortgage repayments.
While variable-rate and tracker mortgages are largely pegged to the Bank of England’s base rate—which was cut twice in 2024 and four times in 2025—fixed-rate products are usually priced off interest rate futures.
As a major oil and gas importer, the UK is likely to feel the effects of soaring energy prices, which could send inflation higher, economists say. This has caused investors to reevaluate UK monetary policy expectations.
What Higher Mortgage Rates Mean for UK Households
“The withdrawal of hundreds of deals suggests lenders are struggling to price in an uncertain rate path. Not necessarily that they expect a dramatic tightening, but that they require clarity,” says Daniela Hathorn, senior market analyst at Capital.com.
She says the economic implications are meaningful, as higher mortgage rates weigh directly on household disposable income and housing affordability.
“More broadly, this dynamic risks tightening UK financial conditions at a sensitive moment.
“If energy prices remain elevated and inflation expectations drift higher, the Bank of England may be forced to maintain a more cautious stance than markets had anticipated. That, in turn, reinforces upward pressure on short-term yields and mortgage rates,” she says.
